By Allan H. Meltzer
Author note: ahead by way of Alan Greenspan
Allan H. Meltzer's enormous historical past of the Federal Reserve method tells the tale of 1 of America's so much influential yet least understood public associations. this primary quantity covers the interval from the Federal Reserve's founding in 1913 throughout the Treasury-Federal Reserve Accord of 1951, which marked the start of a bigger and vastly replaced institution.
To comprehend why the Federal Reserve acted because it did at key issues in its background, Meltzer attracts on assembly mins, correspondence, and different inner files (many made public merely through the Seventies) to track the reasoning in the back of its coverage judgements. He explains, for example, why the Federal Reserve remained passive all through many of the monetary decline that resulted in the good melancholy, and the way the Board's activities helped to provide the deep recession of 1937 and 1938. He additionally highlights the influence at the establishment of people reminiscent of Benjamin robust, governor of the Federal Reserve financial institution of recent York within the Twenties, who performed a key function within the adoption of a extra lively financial coverage via the Federal Reserve. Meltzer additionally examines the impression the Federal Reserve has had on overseas affairs, from makes an attempt to construct a brand new overseas economy within the Twenties to the Bretton Woods contract of 1944 that validated the foreign financial Fund and the realm financial institution, and the failure of the London financial convention of 1933.
Written through one of many world's prime economists, this magisterial biography of the Federal Reserve and the folk who contributed to shaping it's going to curiosity economists, vital bankers, historians, political scientists, policymakers, and someone looking a deep figuring out of the establishment that controls America's handbag strings.
"It was once 'an unheard of orgy of extravagance, a mania for hypothesis, overextended enterprise in approximately all traces and in each component of the country.' An Alan Greenspan rumination in regards to the irrational exuberance of the past due Nineties? test the 1920 annual record of the board of governors of the Federal Reserve. . . . to appreciate why the Fed acted because it did—at those severe moments and lots of others—would require years of analysis, poring over letters, the mins of conferences and inner Fed records. one of these job might certainly deter so much students of financial heritage yet now not, thank goodness, Allan Meltzer."—Wall road Journal
"A seminal paintings that any one drawn to the interior workings of the U. S. valuable financial institution should still learn. a piece that students will mine for years to come."—John M. Berry, Washington Post
"An quite transparent tale approximately why, because the principles that really knowledgeable coverage advanced, issues occasionally went good and occasionally went badly. . . . possible merely wish that we don't have to attend too lengthy for the second one installment."—David Laidler, magazine of financial Literature
"A thorough narrative heritage of a excessive order. Meltzer's research is persuasive and acute. His paintings will stand for a iteration because the benchmark background of the world's strongest financial establishment. it really is a powerful, even awe-inspiring achievement."—Sir Howard Davies, instances greater schooling Supplement
Alice Hanson Jones Biennial Prize (2004)
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Additional resources for A History of the Federal Reserve: 1913-1951 (A History of the Federal Reserve, Volume 1)
Wartime expansion achieved what New Deal policies did not. The war and early postwar years (chapter 7) bring the volume to 1951. As in World War I, the Federal Reserve took an active part in administering wartime regulations and selling bonds. Its pledge to maintain a “pattern of rates” in effect fixed maximum rates at all maturities. The pledge ended any possibility of using monetary policy to control wartime or postwar inflation. In the postwar years to 1951, Federal Reserve officials became increasingly unhappy with the fixed pattern of interest rates, but they did not believe they could change policy without Treasury consent or support in Congress.
This point was well known because Ricardo had stressed it in his writings and testimony, and it had become a main point of emphasis for the writers in what came to be known as the currency school. By accepting this point from Ricardo and the members of the currency school, the directors in effect rejected Thornton’s earlier stress on the effect of business conditions on confidence and of confidence on the demand for money. Neglect of Thornton’s promising start on an analysis that combined short- and long-run consequences of a change in gold or money closed off one of the few opportunities in a century to develop a general equilibrium analysis of money, bank credit, output, prices, and balance of payments.
The bullion reserve had been at one of the highest points in the bank’s history when the policy started, but even so large a reserve had proved insufficient to satisfy the demand for bullion during the crisis. The experience seemed to support the extreme bullionist view that the combined circulation of gold and paper currency had to be kept equal to the amount of gold that would otherwise have circulated. Any excess would raise the price level in proportion to the excess issue, causing a fall in the exchange rate and a loss of bullion.
A History of the Federal Reserve: 1913-1951 (A History of the Federal Reserve, Volume 1) by Allan H. Meltzer